10 Banks Growing Tangible Book Value

With most of the larger banks having reported fourth quarter results, Stifel Nicolaus has come up with a list of banks that have grown their book value per share.

NEW YORK ( TheStreet) -- With most of the larger banks having reported fourth quarter results, investment research firm Stifel Nicolaus has come up with a list of banks that have grown their book value per share.

The report, created by analysts Christopher Mustascio, Brian Zabora and Charles Nabhan, highlights that interest rate risk caused the difference between those banks with the largest tangible book value per share growth and those with the lowest tangible book value per share growth.

"Over the course of the credit cycle a lot of banks were posting negative earnings. That being the case, it brought up the question of how to value companies. We prefer tangible book because it takes out the intangible assets that vary from company to company," explained Nabhan in an interview with TheStreet. "But now that these banks have earnings the value is shifting back to P/E."

Investors should look at tangible book value per share when considering company valuations, especially with regional banks that are recovering from the recession, Nabhan adds.

The difference between tangible book value per share and book value -- which is considered fair value -- is that you take out goodwill and intangible assets such as patents or partnerships from the earnings equation.

"For those investors that look at price-to-book multiples over price-to-earnings multiples as their primary valuation measure for banks, this could narrow the gap between what looks expensive and what looks cheap if long term interest rates continue to rise," analysts said in the report.

In an interview with TheStreet, Brian Foran, managing director of equity research at Nomura Securities, affirmed that there was a large difference in the growth of banks' book values per share due to interest rates.

"From a couple standpoints, banks with large security portfolios fared worse this quarter simply because the interest rate environment has been so low for so long that the negative reinvestment has been a real problem," Foran said.

Here are the top ten large cap banks who are growing book value per share, according to Stifel Nicolaus.